1 Risky Stock You Shouldn't Avoid

If you're looking for adventure you've come to the right place. Today I'm recommending a stock that's been a longtime favorite of mine in the green-tech sector, despite its run-in with risk. But on the flip side, greater risk often leads to greater returns. It's in this light that I introduce Tesla Motors (Nasdaq: TSLA) .

Technological innovation at its bestThe electric-car maker has overcome many challenges this year, including the June delivery of its Model S sedan, ahead of schedule, mind you. Up to this point, analysts debated whether or not Tesla's newest zero-emission car could live up to the hype. Many worried that the start-up automaker would run into production delays, or worse, that the Model S would have performance issues when it finally hit the road.

With those concerns now put to rest, there's a very real chance that Tesla Motors can achieve its goal of reaching profitability in 2013. On top of brag-worthy reviews from some of its toughest critics, Tesla's Model S is charging forward today with more than 12,200 reservations to its name. The purchase decision is often a no-brainer for those who can afford the seven-passenger S series, which starts at $49,900 after federal tax credits.

The more expensive "performance" version of the gas-free full-size sedan races from zero to 60 mph in just 4.4 seconds. Meanwhile, the car's interior completes its futuristic appeal with a 17-inch touchscreen powered by NVIDIA's (Nasdaq: NVDA) Tegra 3 processor. Tesla CEO Elon Musk chose NVIDIA's chips because of their ability to render crisp 3-D graphics and maps without draining the car's battery.

In fact, a recent review by Dan Neil of TheWall Street Journal confirms that the Model S is "possibly the most technologically advanced all-electric car to date." Still, substantial uncertainties remain. Namely because investors aren't just betting on Elon Musk's company, but also on the future success of electric vehicles as a whole.

The EV landscape todayDemand for electric vehicles is finally starting to heat up. In July, total electric-vehicle sales climbed 190% year over year. A report from Barron's puts EV sales on track to hit 50,000 by the end of the year. This is both good and bad news for Tesla. At last look, Tesla had built 50 Model S sedans with a goal of finishing 5,000 by the end of fiscal 2012 -- ultimately ramping up production to 20,000 in 2013.

Meanwhile, auto giants such as Ford (NYSE: F) and General Motors (NYSE: GM) are surging ahead -- helped by the economies of scale they have enjoyed for decades. In fact, electric models now account for a larger portion of new vehicle sales at both of these companies than they did a year ago.

Considering this, Ford recently confirmed plans to introduce five battery-powered options this year. According to Bloomberg, Ford now expects hybrids, plug-in hybrids, and all-electric cars to make up as much as 25% of its new vehicle sales by 2020. That's significant considering Ford's share of the hybrid and EV market clocked in at only 4% so far this year.

Pushing the limitsWhile we are headed in the right direction, revolutionizing the auto industry isn't going to happen overnight. In fact, current year-to-date results show total EV sales accounting for less than 1% of U.S. auto sales -- so there's still a long and bumpy road ahead, especially for a start-up like Tesla.

However, if Tesla is able to successfully ramp up production of its battery-powered S series, then I believe Musk will achieve his goal of lifting Tesla to profitability in 2013. Also, Tesla's best days may be ahead of it. By increasing its rate of production, the company may succeed in passing another Musk milestone: Use the profits from the Tesla Model S to build an SUV (Model X) and perhaps a more affordable car down the line.

Earlier this month, Elon Musk reiterated the risks facing the company, saying "The challenge that Tesla faces over the next few months is scaling production enough to achieve a certain gross margin on our product so we can be cash flow positive. That's extremely important. If we're unable to do that, we'll enter the grave yard with all the other car company startups of the last 90 years."

Fortunately, Musk has a track record that is out of this world. Literally, considering it was his company SpaceX that made history earlier this year by creating the first privately developed rocket to successfully dock at the International Space Station. From revolutionizing space exploration to flipping the auto industry on its head -- I'm confident that Elon Musk can get the job done.

Onward and upwardI believe that in time, shares of Tesla will enjoy the same unrivaled performance that its cars do today. That's why I think this is a don't-miss opportunity for investors who can stomach the risk. The stock is up nearly 5% for the first half of the year and is trading slightly below $30 a share. If this seems out of your risk league, not all is lost. Instead, check out this premium research report on Ford. Read the report for an inside look at key opportunities and risks facing the second largest U.S. auto manufacturer, including a full year of timely updates on the stock. Click here to get your copy now.

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When I read articles like this one, recommending the purchase of a stock with shockingly poor financial perfromance that continues to worsen, I have to ask myself: WWED -- What Would Elon Do?

It's pretty clear, and once again you've come through with the Musk formula:

(1) Call the release of 10 hand-built cars (followed by a stuttering production line that can't seem to approach rate production) "early"

(2) Mention that "Many worried that the start-up automaker would run into production delays" as if they HAVEN'T run into delays, halving the Q3 Fremont output estimate given to analysts, and facing growing difficulty meeting even that

(3) Keep pushing the so-called Musk "strategy" by reiterating "Use the profits from the Tesla Model S to build an SUV (Model X) and perhaps a more affordable car down the line", and ignore the fact that there was a $233M raise for the Model X which has already been spent down keeping the company running while X reservation count has fizzled and initial production slipped into '14.

So, good job. You've mentioned nothing about the perilous cash situation (DoE Loan all gone but for the last $1.4M), that Q3 will hit record losses (read the 10Q: negative gross margins, which will drive Q3 loss >$110M), and that consensus '13 earnings continue to slip and slip, now down by half to 0.48 from their earlier peak (with even that more and more questionable).

I understand that you own TSLA and likely want it to sustain some value. Commensurately, you are usng your position as a MF contributor to pump it. That's OK -- you're hardly the first. But could you spend a couple of hundred characters to explain the current finances, and maybe not be so sycophantic in your theme?